Cardoso's Presidency

Cardoso was inaugurated as president on January 1, 1995, under the
most auspicious circumstances. He had won an outright victory in the
first round of the election and had potentially strong support blocs in
the Chamber of Deputies and Senate. He had strong support from a
majority of the newly elected governors, including those from the
important states of Minas Gerais, São
Paulo, and Rio de
Janeiro, which
had elected governors from the president's own PSDB. Further, the
December 1994 inflation rate was less than 1 percent, unemployment was
low, and popular expectations ratings were extremely high.

After his inauguration, Cardoso called the lame-duck Congress into
session in an attempt to pass important legislation not acted on in
1994. President Cardoso abolished the CEI, which had not yet finished
investigating corruption in the Franco administration, and transferred
its mission to the new Internal Control Secretariat (Secretaria de Contrôle
Interno--SCI). The Cardoso government pushed privatization and organized
the sale of the Rio Dôce Valley Company (Companhia Vale do Rio Dôce--CVRD),
one of the world's largest mining firms; the telecommunications system;
and the electricity sector.

In 1995 Congress enacted major constitutional reforms, including
economic deregulation, eliminating state monopolies, and changes in
election and party legislation. By July 1995, the lower house had passed
(and transmitted to the Senate) all five amendments dealing with the
economic area. The amendments reduced to varying degrees state-held
monopolies on coastal shipping, natural gas distribution,
telecommunications, and petroleum, and eliminated the distinction
between domestic and foreign firms in Article 171.

Perhaps the most important task of the Cardoso government in 1995 was
to promote the reform of key sections of the 1988 constitution in order
to reduce the role of the state in the economy, reform the federal
bureaucracy, reorganize the social security system, rework federalist
relationships, overhaul the complicated tax system, and effect electoral
and party reforms to strengthen the political representation of
political parties. In February 1995, the new Cardoso government moved
quickly to initiate constitutional reform by a three-fifths majority of
each house.

In the area of political reforms, Congress sought to improve Brazil's
very weak party system. Congress proposed establishing a mixed system,
prohibiting coalitions in proportional elections, establishing a minimum
representation threshold (5 percent), permitting immediate reelection to
executive office, imposing more rigid party fidelity norms, restricting
party access to television and radio time, and establishing stricter
regulations for campaign finance.